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My view on Brexit: HTI

We ask executive director Colin Houlihan what a leave vote could mean for his business.

On June 23, the UK will go to the polls to decide if we stay or leave the European Union. If the much talked about ‘Brexit’ happens, there is no doubt the ramifications on businesses would be huge, with both positive and negative elements.

The Source asks some licensees for their thoughts on how a leave vote could impact their companies, as well as the UK licensing industry as a whole.

Today: HTI

What affect do you think a leave vote in the EU referendum this summer will mean for your business?

The European Union is the UK’s most important trade partner, accounting for a large proportion of all UK exports and imports. EU membership matters to the UK economy primarily because it leads to lower trade barriers. This makes goods and services cheaper for UK consumers and allows UK businesses to export more, in my view the loss of this open market would have an impact on all exporting business.

Leaving the EU would also affect foreign direct investment, immigration and economic regulation in the UK. These effects are harder to quantify than changes in just trade terms, but are likely to lead to further declines in income, so this will have an impact in regards to disposable income. The EU is currently negotiating major new free trade agreements with the United States (the Transatlantic Trade and Investment Partnership) and Japan. These trade deals could lower UK prices by 0.6% and save UK consumers around £6.3 billion per year again an exit would impact on affordability and disposable income for the sector.

How do you think it might affect the UK licensing industry as a whole?

This would in my view adversely affect the current structure of the UK licensing industry, significantly, for example, trade mark and copyright law in the UK has been harmonised by EU legislation. If an exit were to happen, then the UK would no longer be part of the EU Trade Mark regime. Existing EUTM registrations would cease to apply in the UK, although it is likely that transitional provisions would be put in place to allow brand owners to convert part of their EUTMs to national UK registrations. Possibly retaining their original priority dates but this is unclear.

Brand owners could consider supplementing their portfolios now with UK national applications for their core brands in any event, but at a cost. A key factor in the enforcement of IP rights in the EU is the effect on trade between EU Member States, as one of the fundamental principles underpinning the EU single market is free movement of goods. If the UK leaves the EU, these considerations preventing the partitioning of the internal market would no longer apply.

Currently, a trade mark owner cannot object to the further dealing of goods it has placed on the market within the European Economic Area unless it has legitimate reasons to do so, as the trade mark rights in those goods will have been ‘exhausted’. If Britain exited the EEA, community-wide trade mark and design rights could be used to prevent imports into the EU from the UK, as these rules would no longer apply to goods placed on the market in the UK.

Likewise, UK rights would not be exhausted by sales elsewhere in Europe and could be used to prevent parallel imports into the UK from the EU. All of which could have a significant impact on the UK licensing industry.

This feature originally appeared in the Summer 2016 edition of Licensing Source Book. Click here to read the full publication.

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